Financial Spring Cleaning: How To Refresh and Reset

 

 

It’s time for an annual spruce

 

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Spring cleaning doesn’t have to stop at your house. In fact, spring can be a great time to do a little financial checking in and tidying up as well. It’s a few months out from any financial resolutions you might have made for the new year, and summer vacations are just around the corner. Here’s a short spring cleaning checklist for your financial life that you can run through before you get outside to enjoy the long-awaited winter thaw.

 

1. Check in on your financial mindset

Your money mindset likely isn’t something you consciously consider very often, but it’s a big driver of your financial behavior. As such, it’s worth doing a check-in as part of your spring cleaning checklist.

  • Why did I make this decision?
  • Did the decision align with my values?
  • How do I feel about the decision?

By consciously evaluating these aspects of your financial decisions, you can more clearly see what’s motivating them. From there, you can figure out what beliefs are and aren’t serving you, and then adjust accordingly.

2. Reconsider any habits on autopilot

Similarly to the above exercise, it’s helpful to slow down every so often to notice what financial habits you may have picked up that you’re not usually pausing to think twice about. For instance, are you getting charged each month for a subscription you’re not really even using? Have you fallen into a routine of buying your lunch most days at work instead of taking a few minutes to pack one at home? Are you online shopping when you’re bored or having a bad day?

Just taking note of these tendencies can make a difference. As Kiplinger points out, “[c]hange requires us to be more intentional about the decisions we make.”

3. Reset your budget

Even if you set your budget at the start of the year, it’s natural for things to begin to veer off course after a bit of time. Spring is a great time to check in and make sure your budget is in good shape. As you look through your last few months of spending, you might take note of whether you were spending within the limits you’d set for yourself and if there are any areas where you might be able to cut back.

CNBC also suggests getting a jumpstart on your summer budget so that you can get as much out of your plans as possible. “Allocate more funds toward these goals in the months ahead so you won’t have to miss out because your spending doesn’t allow for it,” Sasha Grabenstetter, an accredited financial counselor at eMoney Advisor, told CNBC. Grabenstetter even suggested making room in your budget for “the smaller things that you end up buying, such as sunscreen, bug spray, snacks, sunglasses and beach towels.”

4. Refresh your emergency fund

On a similar note, part of your financial spring cleaning might be taking a look at your emergency fund and assessing if it needs replenishing. Experts generally suggest having at least three to six months’ worth of expenses stashed in an emergency fund. Why? As Experian explains, “[h]aving enough savings to cover unexpected expenses such as a high medical bill or an expensive home or auto repair can help you avoid resorting to credit card debt in a bind.”

An easy way to make sure your emergency fund is always stocked is to fund it with automatic transfers that you divert from your paychecks. You might also commit to putting any “extra” money in there, such as your annual bonus or tax refund.

5. Make a plan for paying down debt

If you have debt, you’re not alone — Bankrate estimates that 35 percent of adults in America have credit card debt — but that doesn’t mean you don’t have to address it. And what better way to spring clean your finances than to sweep away debt?

If you’re not sure where to start with debt payoff, Kiplinger suggests focusing on your debt with the highest interest rates first, as “[p]aying those off quicker will reap the highest financial reward for you” in the form of money saved on interest. Other strategies to consider include debt consolidation or a balance transfer credit card, though you’ll need solid credit to qualify.

6. Take a peek at your credit report

A quick item to check off your list is a review of your credit report. You can get a free copy of your credit report each year from AnnualCreditReport.com. As you look things over, keep an eye out for any errors, as well as any unusual or suspicious activity. You can then take steps to dispute anything that’s amiss.

Why take the time to do this? As CNBC explains, “[i]f you regularly review your credit reports, you’ll become more familiar with your finances and may find ways to improve your credit score.” Further, regular reviews can help you “take early action against signs of potential fraud and dispute the errors right away.”

7. Assess progress toward your financial goals

Last but not least, take a moment to appreciate your progress toward your financial goals so far this year, and determine if you need to kick things up a notch or course correct in any way. After all, with spring just arriving, there’s plenty of time left to ensure your financial year shapes up just as you were hoping it would.

Becca Stanek has worked as an editor and writer in the personal finance space since 2017. She has previously served as the managing editor for investing and savings content at LendingTree, an editor at SmartAsset and a staff writer for The Week. This article is in part based on information first published on The Week’s sister site, Kiplinger.com.

 

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